German energy company E.ON forms €250 million venture fund focused on smart grid tech
The German energy company E.ON, which has over 50 million commercial, private and industrial customers, has set up a new investment fund worth 250 million euros (265 million US dollars) called Future Energy Ventures in order to invest in "Asset-Light" -Technology startups invest.
As utilities decarbonise their power generation sources, they find they face a number of technology companies that can orchestrate, integrate, and manage power from increasingly distributed sources. It's a departure from a century's energy infrastructure that relied on large coal and natural gas plants to create the electricity that powers homes and businesses. According to E.ON executives, this is a change that will require exposure to a number of new technologies that are being developed by companies at an early stage.
At E.ON, the new fund is headed by Ines Bergmann-Nolting and Jan Lozek, two long-standing company executives who have already invested in early-stage business from the company's balance sheet. In fact, the fund starts with five companies already in the portfolio - Bidgely, Holobuilder, Intertrust, Thermondo and T-Rex.
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The move to create a formal venture fund, rather than just investing ad hoc from the company's balance sheet, means that E.ON can ideally create a consortium of large investment partners that will be able to adopt the technologies developed by the companies and to commercialize in the portfolio, said Lozek.
"We will need more capital and more partners in order to invest in the best companies worldwide. That is why we have designed our structure in such a way that other partners may be embedded," said Lozek.
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The company sees a split between the networks that startups need and the traditional venture capital model, Lozek said. Large industrial partners like E.ON not only offer investments, but also access to a whole range of commercial and industrial customers and regulators whose support startups need to bring new technologies to market.
"Companies need more than just money to be successful," said Bergmann-Nolting, managing partner at Future Energy Ventures, in a statement. “You need collaboration, mentoring, and the ability to work with other organizations to achieve economies of scale. We want to actively create value by bringing together dynamic and innovative startups, E.ON and affiliates, and a growing number of partners, and making significant impacts for mutual financial and strategic benefit. The use case potential is an essential part of our investment decision. We want to facilitate and support pilots and use case rollouts within E.ON and in our partner ecosystem for the systematic scaling of the entire portfolio. "
According to Lozek, future energy companies will try to run business and take over up to 10% of the shares in the companies they support. The company will focus its investing activities in Europe, the US (mainly Silicon Valley) and Israel, and will focus on supporting asset light companies developing technologies in three areas.
Lozek defines these areas as "future energy" or as a network system that builds on the existing energy infrastructure. Cloud Cities, the integration of this energy infrastructure into urban environments; and finally, frontier technologies, which could include new machine learning models or new cybersecurity technologies to protect increasingly digital assets.
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